More cuts needed for Irish economy to survive, says Sutherland

Peter Sutherland wants the Irish body politic to be ruthless with their cutbacks, so that the economy can regain some of its standing in the international market.

€3 billion seems to be the number mentioned as the level of cuts that will be made in the forthcoming budget, but the former European Commissioner , now Chairman of Goldman Sachs in Europe thinks more sacrifices will have to be made.

"We are told that this is all that the political system can bear but if all the mainstream political parties accept that more is required and are prepared to say it, we can find a way," he said, according to the Irish Examiner.

"The governor of the Central Bank has said we should do so. These cuts involve pain. But the alternative is much greater pain through the higher cost of borrowing, if we fail to act decisively.”

The former attorney general, who is now chairman of Goldman Sachs International, has underlined that it is Ireland’s lack of competitiveness that is hindering the economic recovery.

"Competitiveness is all about productivity. Our costs are still far too high.

"We have really failed to benchmark our costs – particularly but by no means exclusively, wages and salaries – to other European countries," he said.

"The credibility we won internationally last year was down to the ‘brave budget’ introduced for this year," he said.

"We now have to step up to the plate again to recreate confidence, we will be given no benefit of the doubt, and reliance on growth is not going to work," he said.

Sutherland argued that our poor standing in the debt market has influenced international perception of our economic potential, and as long as our public finances remain as they are, this is unlikely to change.